***NASDAQ COMPOSITE THOUGHTS AND FIB RETRACEMENTS>>>
It is no surprise to anyone who follows the markets that they ramped up first thing in 2005 before going into a healthy decline fueled by rampant volume...
On that morning of January 3rd, the Nasdaq Composite topped out at 2191.60, recently that market found at least a short-term bottom on April 29th at 1889.83. A decline in terms of points of 301.77, and in percentage terms of -13.77%.
Now off of that 1889.83 bottom and nice hammer candlestick on heavy volume, the markets have since then rallied to close on the high of the day on Friday May 20th at 2046.42. A gain off of the bottom of 156.59 points or +8.29%.
Now let's look at the fib retracement levels off of these 2 important highs & lows...
Now the ironic thing about the 61.8% retracement resistance level is that is also where the longer-term logarithmic resistance lies... see #msg-6386008 for the details!
I believe these markets are about to sell-off and they will put in a longer-term top this coming week, or at least the Nasdaq will... I see the signals, now let's see if they take place, and let us not forget that the 50 day SMA is positioned below the 200 day SMA... in technical terms, odds favor that this is nothing but a counter-trend rally!
Also markets tend to show the largest gains before the largest of declines, and remember "fear" is the general psychological-term used for drops in the market while "greed" leads the rallies. Thing is that "fear" in the markets tends to be of 2 times greater importance or 2 times greater magnitude. We've recently see how sharp this rally has been, this begs the question, would any accomodating drop be 2 times as great and/or 2 times as sharp?
Now I've got a formula which I keep to myself that I use to speculate on where the next "wave" will take a stock or perhaps even the market this time. And should this rally in the composite prove to be nothing more then a wave 2 up or a denial wave in an overall newly started longer-term down wave, then I've gotten a target that would make the jaws drop on most CNBC ANALysts and that target for the next wave down lies between 1537-1573! Now that's a massive drop, if one can see it coming before hand.
Even if we speculate that the markets hit the 61.8% fib level before declining, which would be 2076.32, a gain of 186.49 points off of the bottom, then some simple math if we 'assume' that a coming decline will be of 2 times greater magnitude in terms of points would put the Nasdaq Composite at 1703.34, that alone means it would break the key 1750 level or the August low...
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